Small Business Wish List for 2013 – Will 2013 be “The Year of the Small Business Grinch?”

John Kabateck
California Executive Director, National Federation of Independent Business

“Every Mom and Pop shop
Down in Small Business-land
Thought the Grinch with them would stand…

But the Grinch,
Who lived in Sacramento-land
Was not quick to give them a hand…

The Grinch disliked Small Business! There were much bigger issues at hand!

Higher taxes, split roll changes and increased regulations – that was the plan!
Now, please don’t ask why. No one quite knows the reason.
It could be, perhaps, that his office was too small
But I think that the most likely reason of all
May have been that his heart was two sizes too small.”

(Based loosely on “How the Grinch Stole Christmas”, by Dr. Seuss)

It’s not that small business owners are by nature pessimistic, but coming off the November election, they certainly have a legitimate reason to be concerned.  With the passage of Prop. 30 and increased taxes, a massive and costly new healthcare law and unresolved “Fiscal Cliff” headed their way, they have to be wondering – what’s next?

There were a few successes in 2012 for small business owners.  Governor Jerry Brown signed NFIB’s sponsored bill, Senate Bill 1099 (Wright), into law –the only major regulatory reform bill to reach his desk. The bill, which takes effect in January, requires all new regulations to take effect only once per quarter, and they will be posted online at the Office of Administrative Law’s website so that businesses can know what is coming in advance and prepare for any new operating rules and costs.  Small businesses also scored a major victory by achieving a significant first step toward Americans with Disabilities Act (ADA) reform. Senate Bill 1186 (Steinberg/Dutton) says that lawyers can no longer send shakedown letters asking for money, but must instead detail what access problems exist so that businesses can fix them.

So the question becomes – what is in store for small business owners in 2013?  What we do know is that those mom and pop business owners are looking for some pretty specific things from their elected leaders in California. Not surprisingly, their common mantra and plea is ‘First, do no harm.’

Small business owners cannot continue to bear the burden of growing costs that come with tax increases and out-of-control government spending.  Many people don’t realize that 99.2% of all businesses in California are small businesses, and small businesses in our state create 2/3 of all net new jobs. Small business owners are the least able to afford but are forced to pay more than larger businesses for the cost of tax compliance (three times more), regulations (37% more) and health insurance (18% more).  Even though Prop. 30 passed, there is great skepticism that the money will ultimately go where proponents led voters to believe it would go: to our kids in the classroom.  Small business owners just want the government to be responsible and honest with our tax dollars and not spend more than they take in.  Increased taxes also keep people from spending money with their local small businesses.  As NFIB/CA member Mike Horner, owner of Tom Sawyer Camps/Catalina Island Camps in Altadena, said, “This gives my customers (mostly families in Southern California) one less reason to send their kids to camp, and is a nail in the coffin of small businesses like mine already near the cliff.”

Small business owners would also like to see some significant progress when it comes to regulatory reform.  As mentioned, Senate Bill 1099 was a good step in the right direction – but we have much more to do. It is critical that new regulations promulgated by agencies do not mandate technology that does not exist yet, and that any new rule is based on sound science. Proposition 65 requires businesses to publicly post a warning if they use any type of chemical that causes cancer or birth defects, but there has been a major loophole that allows the responsible agency to list things as potentially dangerous without an actual scientific evaluation. Businesses can be hit with costly penalties and litigation for something that may not even be harmful! In fact, Prop. 65 lawsuits account for twice the revenues as Americans with Disabilities Act (ADA) suits.

And finally, ADA reform is a priority for small employers.  We have heard it said that businesses can make cuts to deal with higher taxes or increased costs for regulatory compliance – but one ADA lawsuit can shut down a small business forever.  Again, Senate Bill 1186 was a good first step – but we need to make sure that it is implemented quickly.  A good next step would be allowing businesses time to correct violations before filing a lawsuit.  Small business owners want people to patronize their businesses – and they are willing to make accommodations to make sure that happens.  Another part of this is making sure that the state and federal regulations are complementary – not contradictory.  Federal reform has to be part of the equation, as well.

So what does 2013 hold for small business – nobody can say for sure, but hopefully something like this:

“And what happened in 2013…?
Well…in Small Business-land they say
That the Grinch’s small heart
Grew three sizes right away!
And the minute his heart didn’t feel quite so tight,

He realized, he did, he did love small business after all.
He set to make sure the words of small businesses were heeded
To prosper and hire and create jobs that were needed!”

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